Real Estate Vocab (need to study)
Charge for the preparation of a settlement statement under the Uniform Settlement Act is:
$0 !!! There is no charge for the preparation of the settlement statement.
In assessing the profitability of a real estate office, the broker must consider "desk cost." Which answer best describes how to calculate desk cost?
Divide the total operating expenses of the office, including salaries, rent, insurance, etc., by the number of salespersons Desk cost is the total operating expenses of a brokerage or branch office divided by the total number of licensees in that same office.
A percentage lease is calculated on a percentage of which of the following?
Gross sales
If a deed has a restrictive covenant which prohibits the sale of the property to persons of a particular race, that covenant will:
Have no effect on the conveyance, but the covenant will be unenforceable Racial deed restrictions are unenforceable even if the majority of the homeowners might want them, because they violate the U.S. Constitution. They have no effect on the conveyance.
When can a landlord evict a blind or otherwise disabled tenant from the premises?
If the tenant has loud parties and makes too much noise The law requires "reasonable accommodation" for disabled tenants. For example, a landlord must allow a guide dog for a blind person even if there's a "no pets" policy. This doesn't mean that all rules are suspended for that person, however, and noise, safety, and "use of premises policies" may still be enforced.
RESPA would prohibit which of the following acts?
Kickbacks RESPA is concerned with educating consumers about the true costs of borrowing and standardizing lending practices and closing practices. As such, referral fees (or "kickbacks") are prohibited between the different entities involved in the home loan process
Of the following, which is considered a violation of fair housing laws in regards to periodic tenancy:
The requirement of a landlord of a co-signer exclusively for tenants who are single A landlord who requires a co-signor only for single tenants would be in violation of fair housing laws
Title VIII of the Civil Rights Act of 1968, also known as the Federal Fair Housing Act, prohibit discrimination in which of the following?
The sales and leasing and lending of residential properties
Which of the following is true regarding condominiums?
A condominium unit may be mortgaged like any other parcel of real estate
When a lender makes a loan regulated by the real estate settlement procedures act, the loan applicant must be provided with which of the following:
A loan estimate A loan estimate is a disclosure required under the Real Estate Settlement Procedures Act (RESPA) and TRID (TILA/RESPA Integrated Disclosure) that must be given to all mortgage loan applicants at the time of application. The disclosure is an estimate of all settlement charges likely to be incurred at closing.
Which of the following activities is a violation of the Federal Fair Housing Act?
A nonprofit church that denies access to its retirement home to any person because of race.
What records are found in a profit and loss statement?
A record of both fixed and variable operating expenses
Which of the following are listed in a profit and loss statement?
Both fixed and variable operating expenses Both fixed and variable operating expenses is listed in a profit and loss statement. An income statement or profit and loss account is one of the financial statements of a company and shows the company's revenues and expenses during a particular period. It indicates how the revenues are transformed into the net income.
Which of the following is not required to be noted on the agreement to create a lease for more than one year?
Both the lessor's and the lessee's signatures It is not always necessary for a lessor and a lessee to sign a lease for more than one year. Though the lease agreement itself must be in writing, the actions of the lessor and lessee can make the contract enforceable, even if not signed.
What is steering?
Channeling of prospective homebuyers to or away from particular neighborhoods, thereby limiting their choices
Discrimination is prohibited in lending practices under which of these acts?
Equal Credit Opportunity Act (ECOA) Passed in 1992, the Equal Credit Opportunity Act prohibits a broad spectrum of discriminatory lending practices, including the granting or denial of credit or the costs associated with borrowing based on race, gender, marital status, source of income (e.g., public assistance) and other factors.
Broker Kiki took a listing on a 10 unit apartment house and wrote up a financial analysis showing a 12 percent yield on the investment. In the analysis, Kiki did not allow for a vacancy factor, maintenance expenses, or reserves for replacement of furniture and equipment. Kiki showed this analysis to Buba who bought the property. Which of the following describes the above as a possible violation of Real Estate law?
Misrepresentation Misrepresentation occurs when there is obvious knowledge of a certain fact which caused a buyer to enter into a contract. An example of misrepresentation would be claiming that there is no expense on income property, which would be fraudulent misrepresentation.
Which of the following is NOT a strict legal term for a type of employment contract or listing?
Multiple listing
In order for a property manager to determine net operating income on a property, which of the following fees is subtracted from the effective gross income?
Operating expenses Operating expenses are the costs associated with operating income producing property usually before interest and income tax expense, but including property taxes, insurance, repairs and maintenance, replacement reserves. This would be subtracted from the effective gross income
Under the Equal Credit Opportunity Act, lenders are prohibited from doing which of the following?
Refusing credit due to the gender of an applicant The Federal Trade Commission (FTC), the nation's consumer protection agency, enforces the Equal Credit Opportunity Act (ECOA), which prohibits credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or because you get public assistance. Lenders are still allowed to refuse loans to any person for financial reasons that would disqualify anyone from getting that same loan.
Jackson leased his home to Sullivan with a verbal agreement to sell the property to Sullivan. Jackson knows that Sullivan has been making significant improvements to the property in reliance on that verbal agreement. Jackson now declines to sell the property to Sullivan. Which of the following best describes the rights of the parties?
The doctrine of estoppel will apply in this case and Jackson will most likely have to sell The doctrine of estoppel states that a person cannot take a position that contradicts a prior position. In other words, a person can't go back on their word, especially when others have taken action based on that word. In this situation, Jackson made a verbal agreement to sell the property and Sullivan has made improvements to the property based on that verbal agreement. If Jackson refused to sell and Sullivan took him to court over it, Sullivan would likely win the court suit based on the doctrine of estoppel. The statute of frauds is only applicable to the actual purchase agreement (not a verbal agreement to sell at some time in the future) and an ostensible agreement is implied through actions only, whereas this situation has a prior verbal agreement.
When running a real estate office, the phrase "company dollar" means:
The income of an office after all commissions are paid to the salespeople Company Dollar is the gross income of an office minus commissions.
A prospective minority purchaser asks to be shown homes, but does not specify whether he wants to live in a community where there are other minorities or not. How should a licensee decide what properties to show him?
The licensee may select homes for showing as he would for any other prospect By law, an agent can't use race as a basis for choosing which properties and neighborhoods to show a prospective buyer. An agent should select the houses to show to a minority the same way they would select houses to show any other prospective buyer.
Salesperson Andrew receives an offer to purchase, which is accompanied by a $2,000 earnest money deposit in the form of a personal note. Which is true in this case?
The offer should indicate that the deposit is in the form of a note
A seller engages a broker to find a buyer ready, willing and able to purchase a seller's parcel of real property. The seller executes and delivers to the broker an exclusive right-to-sell employment contract. A few weeks prior to the expiration date of the listing, the seller decides to revoke the contract before any sale occurred and prior to the broker finding a buyer ready, willing and able to buy the property. Which of the following statements is most likely to apply in this situation?
The owner can revoke his contract but could be liable for damages
The Fair Housing laws are not applicable in EVERY real estate transaction. If an owner chooses to discriminate in housing, he or she must do which of the following?
The owner must NOT use a real estate professional to conduct the transaction & The owner must NOT discriminate in advertising the property. Homeowners wishing to discriminate in a real estate transaction cannot use a real estate professional, and cannot discriminate in advertising.
Broker Torres had an open listing on a property. He showed the property to a buyer who purchased it. Since this was an open listing agreement, what must broker Torres do to be assured he will receive his commission from the seller?
The payment of commission would be handled the same as any other listing
Assume a broker took an open listing. He then made an oral agreement with another broker to share the commission on the sale of a property. The second broker procured an offer resulting in the sale of the property. If the first broker refused to share his commission on the sale, which of the following is most likely?
The second broker would stand a good chance of winning a court suit for his share of the commission
Real estate agents are licensed by:
Their state governing body
An agreement between Adam granting Bob the right to offer, sell, and distribute services under a marketing plan described by Adam, and under Adam's trademarked name "Adam 24⁄7", is commonly known as:
a franchise agreement. Franchise opportunities are agreements between a franchisee and a franchisor in which the franchisee consents to following a specific marketing plan of the franchisor and often includes the ability to use the franchisor's trademark or trade-name.
An agreement that ends all future lessor-lessee obligations under a lease is called:
a surrender. (he word "surrender" is appropriate, as the lessee is "surrendering" their rights to a leased property. In landlord-tenant law, a surrender occurs when a tenant agrees to return the leased premises to the landlord before the expiration of the lease and the landlord agrees to accept the return of the premises.)
The buyer's earnest money deposit may only be:
anything of value.
A successful property manager would NOT:
appease their tenants by repairing tenant-owned equipment. Property managers represent the owner's interests, not the tenants. Although they should certainly make residents feel welcome, repairing their personal property takes "customer service" too far.
The National Do Not Call Registry provides that:
consumers who have made an inquiry to a licensee may be contacted up to three months later. The National Do Not Call Registry is a database maintained by the United States federal government, listing the telephone numbers of individuals and families who have requested that telemarketers not contact them. Certain callers are required by federal law to respect this request, but it allows for licensees to contact potential customers for up to 3 months after the customer has made an inquiry with them.NOTE - This question is asking about consumers who have only made an inquiry- they may be contacted up to 3 months later. Customers who have had an established business relationship with a company can be contacted up to 18 months later. Next Question
Arthur, a property manager, was $1000 short when needing to pay his office rent. He wrote a check to himself from his client's trust account to cover the cost. Arthurs' action is an example of:
conversion. Conversion is unauthorized use or control of someone else's property. At a minimum this is personal property (like money), but in some jurisdictions it can also apply to types of real property, such as land)
In a usual listing agreement, the broker is authorized to:
find a purchaser and accept a deposit.
The basic goal of a professional real estate property manager is to:
generate the highest possible net return over the long run for the property owner. The overall goal of a property manager is simple- generate the highest net return over the long run for the owner of the property. To accomplish this, the property manager will want to do things like find long-term tenants, maintain the property well, and keep administration costs to a minimum, but each of these is only one step toward the greater goal of generating more profits.
In a standard sales contract, several words were crossed out or inserted by the parties. To eliminate future controversy as to whether the changes were made before or after the contract was signed, the usual procedure is to:
have both parties initial or sign in the margin near each change. It is standard for both parties to initial any changes made to a contract before they sign it. This helps ensure there will be no controversy down the road regarding the changes.
Two brokers decide to list a property together and agree to split the commission 50⁄50. One broker finds the buyer and then refuses to share the commission. To recover the agreed-upon portion of the commission, the deceived broker could file an action:
in a civil court. If a broker agreed to share a commission with another broker and then refused to pay the other broker, the other broker should file an action in a civil court. This matter is about the civil agreement for the commission rather than license law, so it must be filed in a civil court- once payment has been made from the seller to the broker, a Department of Real Estate or Real Estate Commission no longer has jurisdiction.
One general rule of the federal do-not-call regulations is that:
it is illegal to make an unsolicited phone call to a number listed on the national registry.
The right of a tenant to use leased premises is called
leasehold A leasehold estate is an ownership of a temporary right to hold land or property in which a lessee or a tenant holds rights of real property by some form of title from a lessor or landlord. Although a tenant does hold rights to real property, a leasehold estate is typically considered personal property.
"Reversion" best describes the property interest of a:
lessor under a leasehold. In property law, "reversion" is a future interest retained by the grantor after the conveyance of a lesser estate to another person or entity, such as the owner of a fee simple granting a life estate or a leasehold estate.
A listing broker receives his authority to accept an earnest money deposit in the
listing A listing broker receives his authority to accept an earnest money deposit in the listing. Earnest money is a deposit made to a seller that represents a buyer's good faith to buy a home. The money serves as a "promise" to the home seller and gives the buyer extra time to get financing and conduct the title search, property appraisal and inspections before closing
The main purpose of "RESPA" (Real Estate Settlement Procedures Act) is to:
provide consumers with enough information to enable them to shop for settlement services. (RESPA applies to one to four family residential dwellings. It is primarily there to provide consumers with enough information to enable them to shop for settlement services. It requires lenders to disclose closing costs, lender servicing and escrow account practices, and any business relationships between closing service providers and other parties to the transaction)
Ms. Lee received a loan application from her lender asking her to specify her marital status and ethnic background. Legally, she can:
refuse to fill out that portion of the loan application You can refuse to answer questions regarding gender, creed, color, or race and it should not affect your loan.
Federal regulations on unsolicited email:
require commercial emails to include a physical address for the sender The CAN-SPAM Act, a law that sets the rules for commercial email, establishes requirements for commercial messages- for example, they must include a physical address for the sender. It also gives recipients the right to have you stop emailing them and spells out tough penalties for violations.The CAN-SPAM Act covers all commercial messages, which the law defines as "any electronic mail message the primary purpose of which is the commercial advertisement or promotion of a commercial product or service," including email that promotes content on commercial websites. The law makes no exception for business-to-business email. That means all email - for example, a message to former customers announcing a new product line - must comply with the law.
A second offer made on a property prior to the seller's decision on the first offer should be:
submitted to the seller immediately. The agent/broker owes the seller fiduciary responsibilities of loyalty and reasonable care (among others). To fulfill these responsibilities, all reasonable offers must be submitted to the seller as soon as possible to allow the seller to make the best possible decision in the sale of the property. Next Question Save for Review Provide Feedback
Under the Federal Truth-in-Lending Act, two of the most critical facts which must be disclosed to borrowers are:
the finance charge and annual percentage rate.
The balance sheet for a real estate office would show:
the firm's assets, liabilities and net worth.
The states in which the lender holds title to mortgaged real estate are called:
title-theory states.